By Rob Hagy, Law Offices of Rob Hagy, P.C., 154 Hansen Road, Suite 202B, Charlottesville, Virginia. Call (434)293-4562 for more information or email for more information at rob@robhagylaw.com. I look forward to helping you!

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Disclaimer

The information provided on this web blog is public information and is not individualized legal advice. Do not take any legal action on any information contained in this blog!!! Always consulting with an attorney in your state about your legal issues. The presentation of information on this blog does not establish any form of attorney-client relationship with my firm or with me. While I have attempted to maintain the information on this blog as accurately as possible, this information may contain errors or omissions, for which I disclaim any liability. Case law from other jurisdictions discussed here are discussed for comparative purposes only. The author is licensed to practice only in the Commonwealth of Virginia and not in any other state.
Despite the foregoing, this material could be considered to be ADVERTISING MATERIAL. The responsible party for this blog is Robert R. Hagy, II Esq., an attorney licensed to practice law in Virginia, of the Law Offices of Rob Hagy, P.C., whose address is 154 Hansen Rd., Suite 202-B, Charlottesville, Virginia 22911.

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November 06, 2014

As the cost of higher education continues to skyrocket, so does the amount of student loan debt that graduates are saddled with going forward. Some 70% of students who earned bachelor’s degrees in 2012 had student loans, and these loans averaged a startling $29,400. Many students who have also taken out loans for graduate or professional degrees are now leaving school with debts in six figures. According to the Federal Reserve Board, Americans now owe more money on student loans than they owe on auto loans or credit cards. So what happens when couples with significant student loan debt divorce? Who gets stuck having to pay off the bill?

You might assume the answer is simple – the spouse who borrowed the money for school has to pay it back. But seldom is anything simple in the world of family law. In fact, the answer depends a great deal on the unique circumstances of the couple, as well as on the law of the state where the divorce occurs.

While each case is different, here are some of the factors that may come into play:

Were the loans taken out before the marriage, or after? Generally speaking, you’re more likely to be completely on the hook for a student loan if you took it out before you got married. In such a case, you undertook the obligation all on your own, before your spouse became your life partner. What was the money used for? Student loans most commonly cover tuition, of course, and perhaps books, lab fees and the like. But loans can also cover your rent and other living expenses while you’re a student. To the extent that a loan was used to pay your living expenses while you were married, it’s more likely that a judge might think it’s fair to let your spouse pay for part of the debt – since he or she was also helped by the funds.

Who benefited from the degree? If you incur a lot of loans for a professional degree and then file for divorce shortly after you graduate, it’s more likely that you’ll have to pay back all the debt yourself. That’s because any benefit you get from the degree in terms of enhanced earning potential will generallyaccrue only to you; your spouse won’t share in it. On the other hand, if you graduated some years ago and your spouse has enjoyed a higher standard of living for some time as a result of your degree, a judge might consider the degree more of a mutual benefit, and the corresponding debt as more of a mutual obligation.

Were the loans consolidated? Sometimes, married couples consolidate their separate student loans into a single loan. If the couple later get divorced, this can make it complicated to figure out what part of the debt belongs to whom.

Who can afford it? Regardless of everything else, if one spouse has a much greater salary or earning potential than the other, a judge may take this fact into account in dividing up a couple’s debts.

What are the tax consequences? Different ways of dividing up debts (and assets) can lead to very different tax results. These should also be taken into account when deciding who gets what part ofthe tab. If you or someone you know has large student loans or other debts, it might be wise to address these in a prenuptial agreement (or, after a marriage, in a post-nuptial agreement). This can clarify what will happen in the event of a later break-up.

-Rob Hagy, Charlottesville Divorce Lawyer. If you have questions about dividing student loan debt, contact me at (434)293-4562 or email me at rob@robhagylaw.com.

April 24, 2008

In the case of Marvin v. Marvin, the Virginia Court of Appeals ruled, in a published opinion, that a husband's debt of attorney's fees to wife in her proceeding charging violations of a court visitation order cannot be discharged in husband’s bankruptcy, because the fee award to wife is "in the nature of child support."

February 12, 2008

In the case of Rogers v. Rogers, the Virginia Court of Appeals, in a published opinion, ruled that the trial court erred in awarding spousal support when it concluded it could not compare earlier expense figures to newly provided business expense figures and in presuming appellant would receive a discharge of debt in bankruptcy proceedings.

July 26, 2007

In the case of Stacy v. Stacy, the Buchanan County Circuit Court held that, although the parties' 2001 property settlement agreement in their divorce decree had wife waiving spousal support and husband continuing mortgage payments on the marital residence "for the benefit of wife … in the nature of support," it could terminate husband's mortgage-payment obligation upon wife's admission to cohabitation under Va. Code § 20-109(A).

March 16, 2007

In Cote v. Cote, the Virginia Court of Appeals, in an unpublished opinion, ruled that the trial court did not err in finding husband responsible for $100,000 in debt incurred prior to the parties’ final separation, in awarding husband only forty percent of wife’s retirement account, and in awarding wife spousal support.

February 11, 2007

In the case of Harrison v. Allegretto, the Virginia Court of Appeals (in an unpublished opinion) held that the trial court did not err when it failed to apportion martial debt paid by the appellant after the parties separation when making the equitable distribution award. The Husband, who was seeking to apportion the debt to Wife, presented no documentation addressing the basis for the debts he paid or substantiating his claim that the debts were marital. He just put into evidence copies of cover letters written by him to various creditors and copies of cancelled checks made payable to the creditors. He provided no account statements from the creditors or receipts for purchases. In addition, he did not testify at the commissioner’s hearing concerning the purposes for the charges. Rather, he conclusively testified that as to the amount of marital debt after the parties separated. Furthermore, evidence was introduced that both parties had numerous credit card accounts and they transferred balances from old accounts to new accounts. Therefore, the commissioner was unable to determine the source and the nature of the debts and whether they were indeed marital debts.

Important Laws Affecting Family Law Matters

Virginia Code Section 20-108.2This provision of Virginia law sets forth the child support guidelines-a table of reference for determining the base monthly child support obligation.

Virginia Code Section 20-124.3This statute sets forth the factors that a court will consider in divorce proceedings, temporary proceedings, or modification proceedings to determine what custody and visitation arrangement would be best for the child or children involved.